**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**_______________________________________________**

**FORM 10-QSB**

| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003           
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________.

**FIRST NILES FINANCIAL, INC.**

---

(Exact name of small business issuer as specified in its charter)

|Delaware

(State or other jurisdiction of
incorporation or organization)     | 34-1870418

(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------------- | ------------------------------------------------
|55 North Main Street, Niles, Ohio


(Address of principal executive offices) | 44446

(Zip Code)                               

Issuer's telephone number, including area code: (330) 652-2539

> Shares of common stock, par value $.01 per share, outstanding as of May 8, 2003: 1,432,258
> 
> Transitional Small business Disclosure Format (check one): Yes 
> No

|**Item 1.** | **Financial Statements**
|----------- | ------------------------

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
FIRST NILES FINANCIAL, INC. AND SUBSIDIARY
(In thousands, except share data)

|                                                                              | March 31,
2003 | December 31,
2002
|----------------------------------------------------------------------------- | -------------- | -----------------
|ASSETS                                                                        | (Unaudited)    |                  
|Cash and cash equivalents:                                                   
|Noninterest bearing                                                           | $  1,161       | $  1,542         
|Interest bearing                                                              | 6,707          | 8,438            
|Total cash and equivalents                                                    | 7,868          | 9,980            
|                                                                             
|Securities available for sale - at market                                     | 49,169         | 44,734           
|Securities to be held to maturity - at cost                                   | 1,707          | 3,349            
|Loans receivable, net of allowance
    for loan losses of $762 in each period | 39,215         | 40,205           
|Accrued interest receivable                                                   | 655            | 758              
|Federal Home Loan Bank stock, at cost                                         | 1,063          | 1,053            
|Real estate investment, limited
    partnership - at equity                   | 163            | 163              
|Prepaid expenses and other assets                                             | 135            | 46               
|Prepaid federal income taxes                                                  | -              | 13               
|Premises and equipment, at cost less
    accumulated depreciation             | 327            | 334              
|                                                                              |                |                  
|TOTAL ASSETS                                                                  | $100,302       | $100,635         
|                                                                             
|LIABILITIES                                                                   |                |                  
|Deposits                                                                      | $61,503        | $60,895          
|Accrued interest payable                                                      | 138            | 145              
|Accounts payable and other liabilities                                        | 1,238          | 1,282            
|Federal Home Loan Bank advances                                               | 19,500         | 19,500           
|Federal income tax payable                                                    | 87             | -                
|Deferred federal income tax liability                                         | 298            | 480              
|                                                                              |                |                  
|TOTAL LIABILITIES                                                             | 82,764         | 82,302           

|                                                                                                       | March 31,
2003 | December 31,
2002
|------------------------------------------------------------------------------------------------------ | -------------- | -----------------
|SHAREHOLDERS' EQUITY                                                                                   |                |                  
|Preferred stock, $.01 par value, authorized
  500,000 shares; none outstanding                         | -              | -                
|Common stock, $.01 par value, authorized
  6,000,000 shares; 1,754,411 shares issued
  and outstanding | 18             | 18               
|Paid in capital                                                                                        | 6,888          | 6,888            
|Retained earnings                                                                                      | 13,854         | 13,766           
|Net unrealized gains on securities
  available for sale                                                | 1,668          | 2,013            
|Common stock purchased by the Employee
  Stock Ownership Plan                                          | (819)          | (819)            
|Treasury stock - 322,153 shares and
  288,641 shares                                                   | (4,071)        | (3,533)          
|TOTAL SHAREHOLDERS' EQUITY                                                                             | 17,538         | 18,333           
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                             | $100,302       | $100,635         
|                                                                                                      

SEE ACCOMPANYING NOTES

|                                                    | Three Months Ended
March 31
|--------------------------------------------------- | ---------------------------
|                                                    | 2003                       
|Interest income:                                   
|Loans receivable:                                  
|First mortgage loans                                | $  631                     
|Consumer and other loans                            | 38                         
|Mortgage-backed and related securities              | 204                        
|Investments                                         | 459                        
|Interest-bearing deposits                           | 26                         
|TOTAL INTEREST INCOME                               | 1,358                      
|Interest expense:                                  
|Deposits                                            | 340                        
|Borrowings                                          | 220                        
|TOTAL INTEREST EXPENSE                              | 560                        
|NET INTEREST INCOME                                 | 798                        
|Provision for loan losses                           | -                          
|                                                   
|NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES | 798                        
|                                                   
|Noninterest income:                                
|Gain (loss) on sale of securities                   | 49                         
|Service fees and other                              | 8                          
|TOTAL NONINTEREST INCOME                            | 57                         

|                                      | Three Months Ended
March 31
|------------------------------------- | ---------------------------
|                                      | 2003                       
|Noninterest expense:                 
|Equity in loss of limited partnership | -                          
|General and administrative:          
|Compensation and benefits             | 292                        
|Occupancy and equipment               | 23                         
|Federal deposit insurance premiums    | 2                          
|Legal and audit                       | 31                         
|Franchise taxes                       | 45                         
|Other operating expense               | 69                         
|TOTAL NONINTEREST EXPENSE             | 462                        
|INCOME BEFORE INCOME TAXES            | 393                        
|Federal income taxes                  | 119                        
|NET INCOME                            | $  274                     
|BASIC EARNINGS PER SHARE              | $  .21                     
|DILUTED EARNINGS PER SHARE            | $  .20                     

SEE ACCOMPANYING NOTES

|                                                   | Three Months Ended
March 31,
|-------------------------------------------------- | ----------------------------
|                                                   | 2003                        
|                                                  
|Net income                                         | $  274                      
|Other comprehensive income (loss):                
|Unrealized gains (losses) on securities:          
|Unrealized gains (losses) arising for period       | (473)                       
|Related income tax                                 | (160)                       
|                                                   | (313)                       
|Reclassification adjustment:                      
|Gain included in net income, net of
    income tax | (32)                        
|Other comprehensive income (loss)                  | (345)                       
|COMPREHENSIVE INCOME (LOSS)                        | $ (71)                      

SEE ACCOMPANYING NOTES

|                                                                                                         | Three Months Ended
March 31,
|-------------------------------------------------------------------------------------------------------- | ----------------------------
|                                                                                                         | 2003                        
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                     |                             
|Net income                                                                                               | $  274                      
|Adjustments to reconcile net income to net cash
  provided by operating activities                       |                             
|Deferred income taxes                                                                                    | (5)                         
|Depreciation                                                                                             | 7                           
|Amortization of deferred loan fees and costs                                                             | (2)                         
|Amortization of discounts and premiums on
    investments and mortgage-backed and
    related securities | (2)                         
|Gain on sale of securities                                                                               | (49)                        
|Equity in loss of limited partnership                                                                    | -                           
|Provision for loan losses                                                                                | -                           
|Federal Home Loan Bank stock dividends                                                                   | (10)                        
|                                                                                                         | 213                         
|Net increase (decrease) in accrued interest receivable,
  prepaid expenses and other assets              | 27                          
|Net increase (decrease) in accrued interest,
  accounts payable and other liabilities                    | 36                          
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                | 276                         
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                     |                             
|Proceeds from sale of securities available for sale                                                      | 1,049                       
|Purchase of securities available for sale                                                                | (11,091)                    
|Proceeds from maturity of securities available
  for sale                                                | 4,835                       

|                                                                             | Three Months Ended
March 31,
|---------------------------------------------------------------------------- | ----------------------------
|                                                                             | 2003                        
|Proceeds from principal payments on
  mortgage-backed and related securities | 1,943                       
|Net increase (decrease) in interest-bearing
  deposits with banks            | 2,507                       
|Net (increase) decrease in loans                                             | 991                         
|Additions to premises                                                        | -                           
|NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                          | 234                         
|CASH FLOWS FROM FINANCING ACTIVITIES                                         |                             
|Net increase in savings accounts, MMDAs
  and NOW accounts                   | 75                          
|Net increase (decrease) in certificates of
  deposits                        | 533                         
|Purchase of Treasury shares                                                  | (538)                       
|Cash dividends paid on common stock                                          | (185)                       
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                          | (115)                       
|NET INCREASE IN CASH                                                         | 395                         
|CASH AT BEGINNING OF PERIOD                                                  | 766                         
|CASH AT END OF PERIOD                                                        | $1,161                      
|Cash paid during the period for:                                             |                             
|Interest                                                                     | $  566                      
|Income taxes                                                                 | $ 25                        

SEE ACCOMPANYING NOTES

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by First Niles Financial, Inc. ("First Niles") are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the savings and loan industry.

The accompanying unaudited financial statements were prepared in accordance with instructions for Form 10-QSB and, therefore do not include information or footnotes necessary for a complete
presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Management believes that all
normal recurring adjustments that are necessary for a fair presentation of interim period financial information have been reflected in these financial statements. The results of operations for the
interim periods discussed herein are not necessarily indicative of the results that may be expected for a full year. These interim financial statements should be read in conjunction with the
consolidated financial statements and Notes included in the First Niles Financial, Inc. Annual Report on Form 10-KSB for the year ended December 31, 2002.

NOTE B -- STOCK CONVERSION

On October 26, 1998, First Niles began trading as a public company on the Nasdaq SmallCap Market. First Niles issued 1,754,411 shares, $.01 par value common stock, at $10.00 per share, raising
$15.5 million, net of shares acquired by the newly formed Employee Stock Ownership Plan (the "ESOP") and net of the costs of the conversion. Home Federal Savings and Loan Association of Niles
converted to a federal stock savings and loan association and simultaneously received proceeds of $8.5 million in exchange for all of its common stock to First Niles. This transaction was accounted
for using historical cost in a manner similar to that in a pooling of interests.

NOTE C -- EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted-average shares outstanding, during the period, less weighted-average shares in the ESOP that are unallocated and not
committed to be released. Diluted earnings per share reflect the potential effect of stock options and is calculated using the treasury stock method. At March 31, 2003, the market price of First
Niles stock exceeded the exercise price of all outstanding options; the resulting dilution, is presented in the following table, as rounded to the nearest whole cent.

The following table sets forth the computation of earnings per share for the three month periods ended March 31, 2003 and March 31, 2002 (income in thousands):

|                                                  | Three Months Ended
March 31,
|------------------------------------------------- | ----------------------------
|                                                  | 2003                        
|Net income                                        | $ 274                       
|Earnings applicable to basic
  earnings per share | 274                         
|Average common shares                             | 1,447,628                   
|Less average unallocated
  ESOP shares            | 127,661                     
|Average common shares
  outstanding - basic       | 1,319,966                   
|Average common shares
  outstanding - diluted     | 1,352,427                   
|Earnings per share - basic                        | $0.21                       
|- diluted                                         | $0.20                       
|                                                 

|**Item 2.** | **Management's Discussion and Analysis of Financial Condition and
Results of Operations**
|----------- | -----------------------------------------------------------------------------------------

**General**

First Niles Financial, Inc., a Delaware corporation, was formed in July 1998 to act as the holding company for Home Federal Saving and Loan Association of Niles upon the completion of Home
Federal's conversion from mutual to stock form. The conversion was completed on October 26, 1998. All references to First Niles or Home Federal, unless otherwise indicated, on or before October 26,
1998, refer to Home Federal before its conversion from mutual to stock form. References in this Form 10-QSB to "we", "us", and "our" refer to First Niles and/or Home Federal as the context
requires.

Our principal business consists of attracting retail deposits from the general public and investing those funds primarily in permanent and construction loans secured by first mortgages on
owner-occupied, one-to-four family residences. We also originate, to a lesser extent, loans secured by first mortgages on non-owner-occupied one-to-four family residences, permanent and construction
commercial and multi-family real estate loans, and consumer loans. Excess funds are generally invested in investment securities and mortgage-backed and related securities. Additionally, we borrow
funds from the FHLB and reinvest the proceeds in investment securities at favorable interest rate spreads.

The following discussion compares our consolidated financial condition at March 31, 2003 to December 31, 2002 and the results of operations for the three month period ended March 31, 2003 with the
same period ended March 31, 2002. This discussion should be read in conjunction with the consolidated financial statements and footnotes included herein.

**Comparison of Financial Condition at March 31, 2003 and December 31, 2002**

Total assets decreased by $333,000, or 0.3%, to $100.3 million at March 31, 2003 from $100.6 million at December 31, 2002. This decrease was primarily reflected in a $2.1 million decrease in cash
and cash equivalents and a $1.0 million decrease in net loans receivable partially offset by a $2.8 million increase in total securities. The decrease in cash and cash equivalents occurred as
suitable investment alternatives arose during the quarter.

The aforementioned decrease in assets was primarily related to a $795,000 decrease in shareholders' equity, partially offset by a $462,000 increase in total liabilities. Deposits increased
$608,000 during this three month time period. The increase in deposits was comprised of a $75,000 increase in savings accounts and NOW accounts and a $533,000 increase in certificates of deposit.

Shareholders' equity at March 31, 2003 was $17.5 million, a $795,000, or 4.3% decrease from December 31, 2002. The decrease in shareholders' equity, was primarily the result of a $345,000 decrease
in net unrealized gains on securities available for sale and a $538,000 increase in treasury stock. The company repurchased 33,512 of its shares during the period at an average price of $16.04. Book
value per share was $12.25 at March 31, 2003, compared to $12.51 at December 31, 2002. The dividend paid during the quarter totaled $185,000 and was equivalent to $0.14 per common share. At March 31,
2003 and December 31, 2002, there were 1,432,258 and 1,465,770 shares of common stock outstanding, respectively.

Nonperforming loans, consisting of nonaccruing loans and loans delinquent more than 90 days, totaled $1.3 million at March 31, 2003, or 1.3% of total assets, compared to $1.5 million, or 1.5% of
total assets as of December 31, 2002. The allowance for loan losses was $762,000 at March 31, 2003, representing coverage of 59.2% of non-performing loans and 1.9% of net loans receivable. At
December 31, 2002, the allowance for loan losses was also $762,000 and represented coverage of 50.2% of nonperforming loans and 1.9% of net loans receivable. Management believes that the current
level of the allowance for loan losses remains adequate to absorb losses resulting from uncollectible loans. At March 31, 2003 and December 31, 2002 we had no foreclosed assets.

**Results of Operations for the Three-Month Period Ended March 31, 2003**

**General.** Our results of operations depend primarily on our net interest income, which is determined by (i) the difference between interest earned on interest-earning assets,
consisting primarily of mortgage loans, collateralized mortgage obligations, other investments and interest-bearing deposits in other institutions, and interest expense on interest-bearing
liabilities,

primarily deposits and borrowings, and (ii) the relative amounts of our interest-earning assets and interest-bearing liabilities. The level of non-interest income, such as fees received
from customer deposit account service charges and gains on sales of investments, and the level of non-interest expense, such as federal deposit insurance premiums, salaries and benefits, office
occupancy costs, and data processing costs, also affect our results of operations. Finally, our results of operations may also be affected significantly by general economic and competitive
conditions, particularly changes in market interest rates, government policies and actions of regulatory authorities, all of which are beyond our control.

**Net Income.**   For the three months ended March 31, 2003, First Niles recorded net income of $274,000 as compared to $177,000 in the comparative 2002 period, an increase of 54.8%
This net income resulted in an annualized return on average assets of 1.09% as compared to 0.74% in the same period one year ago. The annualized return on shareholders' equity for the three months
ended March 31, 2003 was 6.06% compared to 3.94% for the three months ended March 31, 2002. Basic earnings per share and diluted earnings per share for the three months ended March 31, 2003 was $0.21
and $.20, respectively, as compared to $0.13 on both a basic and diluted basis for the same period in 2002.

**Net Interest Income.**  Net interest income increased by $50,000, or 6.7%, for the three month period ended March 31, 2003 as compared to the respective 2002 period. For the three
months ended March 31, 2003 the interest rate spread was 2.67% as compared to 2.46% for the same period one year prior. The net interest margin for the current period was 3.23% as compared to 3.18%
for the same period one year ago.

The major factor leading to the expansion in net interest rate spread and net interest margin was the continued decline in market interest rates over the past year which impacted the liability
side of the balance sheet to a greater extent than the asset side.

For the three months ended March 31, 2003 total interest income decreased by $79,000, or 5.5%, as compared to the same period in 2002. Specifically, interest income on investments, loans
receivable and interest bearing deposits decreased a collective $127,000 for the three month period ended March 31, 2003 as compared to the same period in 2002. This decrease was partially offset by
a $48,000 increase in interest income on mortgage-backed and related securities for the comparative three month periods. The average yield on interest earning assets declined from 6.10% during the
first quarter of 2002 to 5.49% for the first quarter of 2003.

The Company continues to maintain its level of borrowings from the FHLB at $19.5 million. The proceeds from these borrowings have been reinvested into investment securities (leverage strategy).
This strategy was undertaken at a net interest rate spread and net interest margin lower than those related to core operations. The interest rate spread and net interest margin on the leverage
strategy was approximately 188 basis points as of March 31, 2003. This leverage strategy requires a negligible amount of administrative expense and is the primary reason that such an activity can be
undertaken at a reduced interest rate spread and net interest margin as compared to core operations, while making a significant contribution to net income.

All of our FHLB Advances are convertible at the option of the FHLB on a specified date and quarterly thereafter to a variable rate based on the 3-month LIBOR. At the time of conversion, each
advance may be prepaid without penalty. At March 31, 2003, $12.0 million of the FHLB advances were subject to conversion at the next quarterly conversion date. As a strategy to mitigate the interest
rate risk associated with such conversions in a rising interest rate environment, we have shortened the expected life and increased the cash flow of our investment portfolio by reducing our callable
U.S. Agency security portfolio and reinvesting the proceeds and other liquid funds into CMOs. During the quarter ended March 31, 2003, our callable U.S. Agency security portfolio declined by $4.0
million, while our CMO portfolio increased $7.7 million. The increased cash flow generated by the CMOs will help enable us to payoff FHLB Advances should they convert.

Total interest expense decreased by $129,000, or 18.7%, as compared to the same period one year prior. This decrease related solely to interest on deposits. The overall cost of funds for the
quarter ended March 31, 2003 was 2.81%, an 83 basis point decrease from the same quarter one year ago. The average interest rate on deposits for the quarter, which comprised 75.9% of total interest
bearing liabilities at March 31, 2003, declined to 2.25%, 94 basis points lower than one year ago. The average interest rate on FHLB advances, which comprise the remaining portion of interest bearing
liabilities, remained unchanged at 4.58% on a year to year basis.

**Provision for Loan Losses**.   For the three months ended March 31, 2003 there was no provision for loan losses as compared to a $30,000 provision for loan losses for the same period
in 2002. The provision for loan losses is a result of management's periodic analysis of risks inherent in our loan portfolio from time to time, as well as the adequacy of the allowance for loan
losses. It is our policy to provide valuation allowances for estimated losses on loans based upon past loss experience, current trends in the level of delinquent and specific problem loans, loan
concentrations to single borrowers, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, and current and anticipated economic
conditions in our market area. Accordingly, the calculation of the adequacy of the allowance for loan losses is not based directly on the level of non-performing assets.

Management will continue to monitor the allowance for loan losses and make future additions to the allowance through the provision for loan losses as economic conditions dictate. Although we
maintain the allowance for loan losses at a level which we consider to be adequate to provide for losses, there can be no assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in future periods. In addition, management's determination as to the amount of the allowance for loan losses is subject to review by the
Office of Thrift Supervision and the Federal Deposit Insurance Corporation, as part of their examination process, which may result in the establishment of an additional allowance.

**Noninterest Income**.  Noninterest income of $57,000 for the three months ended March 31, 2003 was $45,000 higher than during the same period in 2002. This increase was essentially
the result of a $50,000 increase in gain on sale of investment securities in the current quarter as compared to previous comparative quarter. Service fees and other income decreased by $5,000 to
$8,000 during the current quarter as compared to the same quarter in 2002.

**Noninterest Expense**.  Noninterest expense decreased $26,000, or 5.3%, for the three months ended March 31, 2003 as compared to the same period in 2002. This decrease was primarily
attributable to a decrease on legal and audit fees of $13,000 and a $22,000 decrease in equity in loss of limited partnership expense.

**Federal Income Taxes**.  The provision for federal income taxes increased by $54,000 in the three months ended March 31, 2003 as compared to the same period in 2002, resulting in a
tax provision of $119,000. The increase in the provision for federal income taxes as compared to the same period in 2002 was primarily due to a $151,000 increase in pre-tax income from period to
period. The effective tax rate in the current three month period was 30.3%. For the respective three-month period, one year prior, the effective tax rate was 26.9%. The above effective tax rates
differ from the statutory rate of 34% primarily due to our ownership interest in a low income housing tax credit program. The tax credits from this program are expected to last through 2006.

**Liquidity and Capital Resources**

Our main source of funds are deposits, and loan and securities repayments. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and loan prepayments
are more influenced by interest rates, general economic conditions and competition. Safe and sound banking practices require us to maintain cash and eligible investments at levels that assure our
ability to meet demands for deposit withdrawals and the repayment requirements of short-term borrowings, if any. We believe that sufficient funds are available for us to meet our current liquidity
needs. Total cash and cash equivalents amounted to $7.9 million at March 31, 2003.

We use our capital resources to meet ongoing commitments to fund various types of deposit withdrawals, to invest in securities, to fund existing and future loan commitments, to maintain liquidity,
and to meet operating expenses. At March 31, 2003 we had outstanding commitments to extend credit totaling $4.5 million, including $2.4 million of unused consumer lines of credit.

Home Federal is required to maintain minimum regulatory capital sufficient to meet tangible, core and risk-based capital ratios of 1.5%, 3.0% and 8.0%, respectively. As of March 31, 2003, Home
Federal significantly exceeded its regulatory capital requirements, with tangible, core, and risk-based capital ratios of 15.04%, 15.04% and 39.39%, respectively.

**Cautionary Forward-looking Statements**

This document, including information incorporated by reference, contains, and future filings by the Company on Form 10-KSB, Form 10-QSB, and Form 8-K and future oral and written statements by the
Company and its management may contain, forward-looking statements about First Niles and its subsidiary which we believe are within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities, interest rates, cost
savings and funding advantages expected or anticipated to be

The following factors, many of which are subject to change based on various other factors beyond our control, could cause our financial performance to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward-looking statements:

- the strength of the United States economy in general and the strength of the local economies in which we conduct operations;
- the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;
- the financial markets interest rate and monetary fluctuations particularly the relative relationship of short-term interest rates to long-term interest rates;
- the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality
compared to competitors' products and services;
- the willingness of users to substitute competitors' products and services for our products and services;
- the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance);
- the impact of technological changes;
- acquisitions;
- changes in consumer spending and saving habits; and
- our success at managing the risks involved in the foregoing.

**Item 3. Controls and Procedures**

**(a)  Evaluation of Disclosure Controls and Procedures:** An evaluation of
the Company's disclosure controls and procedures (as defined in Section 13(a)-14(c) of the Securities Exchange Act of 1934 (the "Act") was carried out under the supervision and with the participation
of the Company's Chief Executive Officer, Principal Financial Officer and several other members of the Company's senior management within the 90-day period proceeding the filing date of this
quarterly report. The Company's Chief Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures as currently
in effect are effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the

Company's
management (including the Chief Executive Officer and Principal Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the
SEC's rules and forms.

**(b)  Changes in Internal Controls:** In the quarter ended March 31, 2003,
the Company did not make any significant changes in, nor take any corrective actions regarding, its internal controls or other factors that could significantly affect these controls.

PART II - OTHER INFORMATION

|**Item 1.** | **Legal Proceedings:**                                                                                                                                                      
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            | There are no matters required to be reported under this item.                                                                                                               
|**Item 2.** | **Changes in Securities:**                                                                                                                                                  
|            | There are no matters required to be reported under this item.                                                                                                               
|**Item 3.** | **Defaults Upon Senior Securities:**                                                                                                                                        
|            | There are no matters required to be reported under this item.                                                                                                               
|**Item 4.** | **Submission of Matters to a Vote of Security Holders:**                                                                                                                    
|            | There are no matters required to be reported under this item.                                                                                                               
|**Item 5.** | **Other Information:**                                                                                                                                                      
|            | There are no matters required to be reported under this item.                                                                                                               
|**Item 6.** | **Exhibits and Reports on Form 8-K:**                                                                                                                                       
|            | (a)                                                                                                                                                                         
|            |                                                                                                                                                                             
|            | (b)                                                                                                                                                                         
|            | On February 12, 2003, the Registrant filed a Current Report on Form 8-K under Item 5 to announce the Registrant's earnings for the quarter and year-ended December 31, 2002.

**SIGNATURES**

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                   | **FIRST NILES FINANCIAL, INC.**
Registrant
|------------------ | ------------------------------------------
|Date: May 14, 2003 | By:                                       
|Date: May 14, 2003 | By:                                       

**CERTIFICATIONS**

I, William L. Stephens, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of First Niles Financial, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

> a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
> those entities, particularly during the period in which this quarterly report is being prepared;
> 
> 
> 
> b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
> 
> 
> 
> c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):

> a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and
> have identified for the registrant's auditors any material weaknesses in internal controls; and
> 
> 
> 
> b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 14, 2003

/s/ William L. Stephens

---

I, Lawrence Safarek, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of First Niles Financial, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

> a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
> those entities, particularly during the period in which this quarterly report is being prepared;
> 
> 
> 
> b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
> 
> 
> 
> c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):

> a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and
> have identified for the registrant's auditors any material weaknesses in internal controls; and
> 
> 
> 
> b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 14, 2003

/s/ Lawrence Safarek

---

|Exhibit
Number | Document                                                                                                                                                                                                                                                                                                         
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3              | The Certificate of Incorporation and Bylaws, filed on July 10, 1998 as Exhibits 3.1 and 3.2, respectively, to Registrant's Registration Statement on Form SB-2 (File
No. 333-58883), are incorporated by reference.                                                                                              
|4              | Registrant's Specimen Stock Certificate, filed on July 10, 1998 as Exhibit 4 to Registrant's Registration Statement on Form SB-2 (File No. 333-58883), is
incorporated by reference.                                                                                                                             
|10.1           | Employment Agreement between Registrants operating bank subsidiary and William L. Stephens, George J. Swift and Lawrence Safarek filed as Exhibits 10.1, 10.2 and
10.3 to Registrant's Report on Form 10-KSB for the fiscal year ended December 31, 1998 (File No. 0-24849), is incorporated herein by reference.
|10.2           | Registrant's 1999 Stock Option and Incentive Plan, filed on November 12, 1999 as Appendix A to
Registrant's Proxy Statement on Schedule 14A (File No. 0-24849), is incorporated herein by reference.                                                                                                             
|10.3           | Registrant's 1999 Recognition and Retention Plan filed on November 12, 1999 as Appendix B to Registrant's Proxy Statement on Schedule 14A (File No. 000-24849), is
incorporated herein by reference.                                                                                                             
|11             | Statement re computation of earnings per share (see Note C of the Notes to Financial Statements included in this Form 10-QSB).                                                                                                                                                                                   
|99.1           | Certification (filed herewith)